What You Should Know About Anti-Money Laundering and Counter-Terrorism Financing in Indonesia
Money laundering risks may arise as a result of legislative and regulatory deficiencies in the financial system. Corruption and taxation issues are the most common sources of risk, followed by drug trafficking, illegal logging, wildlife trafficking, theft, bank fraud, embezzlement, credit card fraud, and the sale of counterfeit goods. The banking, financial markets, real estate, and motor vehicle industries are all used to launder proceeds from these predicate offenses. Proceeds are frequently laundered offshore in regional jurisdictions before being repatriated to other nations, such as Indonesia.
Since the turn of the century, the Indonesian government has increased its legislative efforts to combat financial crime and promote anti-money laundering. Now, Indonesia is making headway in countering vulnerabilities, as authorities continue to issue regulations tailored toward a risk-based approach, and technical compliance with AML standards is generally high.
Early attempts were highlighted by the establishment of the Pusat Pelaporan dan Analysis Transaksi Keuangan (PPATK), Indonesia’s financial intelligence arm, and the passing of legislation aimed explicitly at money laundering and related offenses such as terrorism financing in 2002.
Wallex adheres to high-risk prevention standards and follows the Anti Money Laundering and Countering Financing of Terrorism Laws and Regulations in the fight against money laundering and terrorist financing. Here’s a rundown of how Wallex detects and stops financial crimes, including money laundering and terrorism financing.
In Indonesia, AML compliance is mandatory.
Indonesia’s banks and financial institutions take a risk-based approach to the money laundering dangers they confront by enhancing their AML policies and working toward the criteria set forth in the FATF’s 40 Recommendations. The risk-based approach, which entails analyzing the risk posed by individual customers and clients, is at the heart of FATF AML policy. In practice, Indonesian anti-money laundering systems must:
- To identify customers and clients, implement suitable customer due diligence (CDD) methods. For high-risk customers, further due diligence is also required.
- Customers are screened against a list of international sanctions, negative media, and politically exposed persons (PEP) lists.
- Appoint a dedicated anti-money laundering compliance officer to monitor the internal anti-money laundering program.
Know Your Client (KYC)
In Indonesia, Know Your Client (KYC) regulations are based on Law №8 of 2010 on the Prevention and Eradication of Criminal Acts of Money Laundering (the “AML Law”). The AML Law requires financial services providers, such as Wallex, to adopt KYC principles in line with the regulations set forth by each financial services provider’s regulatory institution.
At a minimum, financial services firms’ KYC procedures must achieve the following:
- Identification of service users;
- verification of the user of the service; and
- Transactions of service users are being monitored.
Wallex collaborates with the following organizations to support the Customer Due Diligence process: